BOUNCING CHECKS LAW (BATAS PAMBANSA BLG.

22)

2 Acts penalized by BP 22
1. Making or drawing and issuing any check to apply on account or for value, knowing at the time of
issue that the drawer does not have sufficient funds in or credit with the drawee bank.
2. Having sufficient funds in or credit with the drawee bank shall fail to keep sufficient funds or to
maintain a credit to cover the full amount of the check if presented within a period of 90 days from
the date appearing thereon, for which reason it is dishonored by the drawee bank.

Elements of the offense

1. drawing and issuance of any check to apply on account or for value;
2. knowledge by the maker, drawer, or issuer that at the time of issue he did not have sufficient funds
in or credit with the drawee bank for the payment of such check in full upon presentment; and
3. said check is subsequently dishonored by the drawee bank for insufficiency of funds or credit, or
would have been dishonored for the same reason had not the drawer, without any valid reason,
ordered the bank to stop payment.

Evidence of knowledge of insufficient funds

The making, drawing and issuance of a check payment of which is refused by the drawee bank because
of insufficient funds in or credit with such bank, when presented within ninety (90) days from the date
of the check, shall be prima facie evidence of knowledge of such insufficiency of funds or credit, unless
such maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for
payment in full by the drawee of such check within five (5) banking days after receiving notice that such
check has not been paid by the drawee.

The prima facie presumption arises when a check is issued. But the law also provides that the
presumption does not arise when the issuer pays the amount of the check or makes arrangement for its
payment “within five banking days after receiving notice that such check has not been paid by the
drawee.” Verily, BP 22 gives the accused an opportunity to satisfy the amount indicated in the check and
thus avert prosecution.

Duty of drawee; rules of evidence

It shall be the duty of the drawee of any check, when refusing to pay the same to the holder thereof
upon presentment, to cause to be written, printed, or stamped in plain language thereon, or attached
thereto, the reason for drawee's dishonor or refusal to pay the same: Provided, That where there are no
sufficient funds in or credit with such drawee bank, such fact shall always be explicitly stated in the
notice of dishonor or refusal. In all prosecutions under this Act, the introduction in evidence of any
unpaid and dishonored check, having the drawee's refusal to pay stamped or written thereon or
attached thereto, with the reason therefor as aforesaid, shall be prima facie evidence of the making or
issuance of said check, and the due presentment to the drawee for payment and the dishonor thereof,
and that the same was properly dishonored for the reason written, stamped or attached by the drawee
on such dishonored check.

Not with standing receipt of an order to stop payment, the drawee shall state in the notice that there
were no sufficient funds in or credit with such bank for the payment in full of such check, if such be the
fact.

Credit construed

The word "credit" as used herein shall be construed to mean an arrangement or understanding with the
bank for the payment of such check.

3 Significant Periods

a. 5 days – the maker or issuer must make arrangements to make good the check within 5 days to
escape criminal liability for issuing a rubber check
 b. 90 days – he must maintain sufficient funds within 90 days to destroy the prima facie
presumption of knowledge of insufficiency of funds for the check
c. 180 days – failure of the payee to deposit or encash the check within 180 days will make the
check stale or valueless; no criminal action can arise therefrom

As compared to Estafa

In general, in estafa, the accused defrauded another by abuse of confidence of by means of deceit and
damage or prejudice capable of pecuniary estimation is caused to the offended party or third persons.

Article 315 No. 2 (d) of the Revised Penal Code

By post-dating a check, or issuing a check in payment of an obligation when the offender therein were
not sufficient to cover the amount of the check. The failure of the drawer of the check to deposit the
amount necessary to cover his check within three (3) days from receipt of notice from the bank and/or
the payee or holder that said check has been dishonored for lack of insufficiency of funds shall be prima
facie evidence of deceit constituting false pretense or fraudulent act.

The issuance of the check (whether postdated or not) by the offender, prior to or simultaneous with the
transaction, must be for the purpose of contracting the obligation. Otherwise if the check is issued in
payment of a preexisting obligation, no estafa is committed, only a civil liability. Good faith is a defense
in a charge of estafa by postdating or issuing a check.

There is prima facie evidence of deceit when the drawer fails to pay or make arrangement for payment
three (3) days after receiving notice of dishonor.

PDIC LAW (REPUBLIC ACT NO. 3591) AS AMENDED BY RA NO. 9302 AND RA NO. 9576

All deposits of any bank are insured with the Philippine Deposit Insurance Corporation or PDIC. (Section
4)

Insured deposit under the law means the net amount due to any depositor for deposits in an insured
bank (after deducting any offsets) but should not exceed P500,000 (RA No. 9576). If the depositor has 2
or more accounts with the same bank, the maximum coverage of P500,000 pertains to the sum of all
such accounts maintained in the same right and capacity. There is no distinction as to the type of
account (deposit). However, deposit in a branch outside the Philippines is not covered.

In determining such amount due to any depositor, there shall be added together all deposits in the bank
maintained in the same right and capacity for his benefit either in his own name or in the name of
others.

A joint account regardless of whether the conjunction "and," "or," "and/or" is used, shall be insured
separately from any individually-owned deposit account: Provided, That (1) If the account is held jointly
by two or more natural persons, or by two or more juridical persons or entities, the maximum insured
deposit shall be divided into as many equal shares as there are individuals, juridical persons or entities,
unless a different sharing is stipulated in the document of deposit; and (2) If the account is held by a
juridical person or entity jointly with one or more natural persons, the maximum insured deposit shall
be presumed to belong entirely to such juridical person or entity

The proceeds of the insurance shall be paid by the PDIC to the depositor whenever the insured bank is
closed on account of insolvency. An insured bank shall be deemed to have been closed on account of
insolvency when ordered closed by the Monetary Board of the BSP.

Whenever an insured bank shall have been closed on account of insolvency, payment of the insured
deposits in such bank shall be made by the Corporation as soon as possible either (1) by cash or (2) by
making available to each depositor a transferred deposit in another insured bank in an amount equal to
the insured deposit of such depositor: Provided, That the Corporation, in its discretion, may require
proof of claims to be filed before paying the insured deposits, and that in any case where the
Corporation is not satisfied as to the validity of a claim for an insured deposit, it may require the final
determination of a court of competent jurisdiction before paying such claim.

The Corporation, upon the payment of any depositor as provided for in subsection (c) of this section
shall be subrogated to all rights of the depositor against the closed bank to the extent of such payment.

The liability of the PDIC for insured deposits rests upon the existence of deposit with insured bank, not
on the negotiability or non-negotiability of the certificates evidencing these deposits.

SECRECY OF BANK DEPOSITS (REPUBLIC ACT NO. 1405), AS AMENDED BY RA NO. 7653

Peso Deposits

All deposits of whatever nature with banks or banking institutions in the Philippines including
investments in bonds issued by the Government of the Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an absolutely confidential nature and may not be
examined, inquired or looked into by any person, government official, bureau or office

Exceptions:

a. When the examination is made in the course of a special or general examination of a bank and is
specifically authorized by the Monetary Board after being satisfied that there is reasonable ground
to believe that a bank fraud or serious irregularity has been or is being committed and that it is
necessary to look into the deposit to establish such fraud or irregularity
b. When the examination is made by an independent auditor hired by the bank to conduct its regular
audit provided that the examination is for audit purposes only and the results thereof shall be for
the exclusive use of the bank
c. Upon written permission of the depositor
d. In cases of impeachment
e. Upon order of a competent court in cases of bribery or dereliction of duty of public officials
f. In cases where the money deposited or invested is the subject matter of the litigation
g. Upon order of the competent court or tribunal in cases involving unexplained wealth under the Anti-
Graft and Corrupt Practices Act
h. Upon inquiry by the Commissioner of Internal Revenue for purposes of determining the net estate
of a deceased depositor
i. Upon the order of a competent court or in proper cases by the Anti-Money Laundering Council
where there is a probable cause of money laundering and in some instances even without court
order
j. Disclosure to the Treasurer of the Philippines for dormant deposits for at least 10 years under the
Unclaimed Balances Act
k. Report of banks to Anti-Money Laundering Council of covered and/or suspicious transactions
l. Upon order of the Court of Appeals, examination by law enforcement officers in terrorism cases
under the Human Security Act of 2007

It shall be unlawful for any official or employee of a bank to disclose to any person other than those
mentioned in Section Two hereof, or for an independent auditor hired by a bank to conduct its regular
audit to disclose to any person other than a bank director, official or employee authorized by the bank,
any information concerning said deposits

FOREIGN CURRENCY DEPOSIT SYSTEM IN THE PHILIPPINES (REPUBLIC ACT NO. 6426)

Any person, natural or juridical, may, in accordance with the provisions of this Act, deposit with such
Philippine banks in good standing, as may, upon application, be designated by the Central Bank for the
purpose, foreign currencies which are acceptable as part of the international reserve, except those
which are required by the Central Bank to be surrendered in accordance with the provisions of Republic
Act Numbered two hundred sixty-five (Now Rep. Act No. 7653).

All foreign currency deposits made under this Act, as amended by PD No. 1035, as well as foreign
currency deposits authorized under PD No. 1034, including interest and all other income or earnings of
such deposits, are hereby exempted from any and all taxes whatsoever irrespective of whether or not
these deposits are made by residents or nonresidents so long as the deposits are eligible or allowed
under aforementioned laws and, in the case of nonresidents, irrespective of whether or not they are
engaged in trade or business in the Philippines.

Section 8 – Secrecy of Foreign Currency Deposits

All foreign currency deposits authorized under this Act, as amended by PD No. 1035, as well as foreign
currency deposits authorized under PD No. 1034, are hereby declared as and considered of an
absolutely confidential nature and in no instance shall foreign currency deposits be examined, inquired
or looked into by any person, government official, bureau or office whether judicial or administrative or
legislative, or any other entity whether public or private.

Exceptions
a. Upon the written permission of the depositor
b. Under Section 11 of the Anti-Money Laundering Act (the AMLC may inquire into or examine any
particular deposit or investment with any banking institution or non-bank financial institution upon
order of any competent court in cases of violation of this Act when it has been established that
there is probable cause that the deposits or investments involved are in any way related to a money
laundering offense)
c. Under Sections 27 of the Human Security Act (authority made in writing by the justices of the Court
of Appeals designated as a special court to handle anti-terrorism cases after satisfying themselves of
the existence of probable cause in a hearing called for that purpose that: (1) a person charged with
or suspected of the crime of terrorism or, conspiracy to commit terrorism, (2) of a judicially declared
and outlawed terrorist organization, association, or group of persons; and (3) of a member of such
judicially declared and outlawed organization, association, or group of persons)
d. Under Sections 28 of the Human Security Act (upon written order of the Court of Appeals
authorizing the examination of bank deposits, placements, trust accounts, assets, and records: (1) of
a person charged with or suspected of the crime of terrorism or conspiracy to commit terrorism; (2)
of any judicially declared and outlawed terrorist organization, association, or group of persons, or
(3) of any member of such organization, association, or group of persons in a bank or financial
institution)

GENERAL BANKING LAW (REPUBLIC ACT NO. 8791)

Banks – entities engaged in the lending of funds obtained in the form of deposits from the public.

Banking is fiduciary in nature that required high standards of integrity and performance.

GBL requires that banks are stock corporations and its funds are obtained from the public, i.e. deposits
of twenty (20) or more persons.

It is subject to heavy and close supervision and/or regulation by the Bangko Sentral ng Pilipinas or BSP.

GBL provides that a bank or quasi-bank cannot be incorporated without authority from the BSP. The law
states that “the Securities and Exchange Commission shall not register the articles of incorporation of
any bank, or any amendment thereto, unless accompanied by a certificate of authority issued by the
Monetary Board, under its seal.

It is required to exercise utmost diligence in the handling of deposits.

Classification of Banks
1. Universal Banks – banks that have the authority to exercise, in addition to the powers
authorized for a commercial bank, the powers of an investment house and the power to invest
in non-allied enterprises.
2. Commercial Banks – banks that have, in addition to the general powers incident to corporations,
all such powers as may be necessary to carry on the business of commercial banking, such as
accepting drafts and issuing letters of credit; discounting and negotiating promissory notes,
drafts, bills of exchange, and other evidences of debt; accepting or creating demand deposits;
receiving other types of deposits and deposit substitutes; buying and selling foreign exchange
and gold or silver bullion; acquiring marketable bonds and other debt securities; and extending
credit, subject to such rules as the Monetary Board may promulgate.
3. Thrift Banks – banks that include savings and mortgage banks, private development banks, and
stock savings and loan associations.
4. Rural Banks – banks that are created to make needed credit available and readily accessible in
the rural areas for purposes of promoting comprehensive rural development.
5. Cooperative Banks – banks that primarily provide financial, banking and credit services to
cooperative organizations and their members.
6. Islamic Banks – Charter of Al Amanah Islamic Investment Bank of the Philippines.
7. Other classifications of banks as determined by the Monetary Board of the BSP

Basic Functions of Banks

1. Deposit Function

Fixed, savings and current deposits of money and similar institutions shall be governed by the
provisions concerning simple loan. Under the rule, the bank is the debtor while the depositor is the
creditor.

While the function is referred to as deposit, it is strictly “simple loan” where the bank is the debtor
and the depositor is the creditor. Fixed, savings and current deposits of money in banks and similar
institutions shall be governed by the provisions concerning simple loan.

Since the bank is the borrower, it can make use as its own the money deposited, and the amount is
not held in trust for the depositor nor is it kept for safekeeping.

2. Loan Function

A bank shall grant loans and other credit accommodations only in amounts and for the periods of
time essential for the effective completion of the operations to be financed. Such grant of loans and
other credit accommodations shall be consistent with safe and sound banking practices.

Single Borrower’s Limit (SBL)

Ceiling – the total amount of loans, credit accommodations and guarantees that may be extended
by a bank to any person, partnership, association, corporation or other entity shall at no time
exceed 25% of the net worth of such bank. The basis for determining compliance with SBL is the
total credit commitment of the bank to the borrower.

DOSRI Accounts

Restrictions (not total prohibition) are imposed on borrowings and security arrangement by
directors, officers and stockholders of the bank and their related interests.

Requisites of DOSRI Accounts

1. The borrower is a director, officer or any stockholder of a bank and related interests
2. He contracts a loan or any form of financial accommodation
3. The loan or financial accommodation is from
a. His bank
 b. A bank that is a subsidiary of a bank holding company of which both his bank and lending
bank are subsidiaries
c. A bank in which a controlling portion of the shares is owned by the same interest that owns
a controlling portion of the shares of his bank
4. The loan or financial accommodation of the director, officer or stockholder, singly or with that of
his related interest, is in excess of 5% of the capital and surplus of the lending bank or in the
maximum amount permitted by law, whichever is lower

ANTI-MONEY LAUNDERING ACT (REPUBLIC ACT NO. 9160), AS AMENDED BY RA NO. 9194 AND RA
NO. 10167

Money Laundering

A crime whereby the proceeds of an unlawful activity are transacted, thereby making them appear
to have originated from legitimate sources.

It is committed by the following:

1. Any person knowing that any monetary instrument or property represents, involves, or relates
to, the proceeds of any unlawful activity, transacts or attempts to transact said monetary
instrument or property
2. Any person knowing that any monetary instrument or property involves the proceeds of any
unlawful activity, performs or fails to perform any act as a result of which he facilitates the
offense of money laundering referred to in paragraph (a) above
3. Any person knowing that any monetary instrument or property is required under this Act to be
disclosed and filed with the Anti-Money Laundering Council, fails to do so

“COVERED TRANSACTION" IS A TRANSACTION IN CASH OR OTHER EQUIVALENT MONETARY

INSTRUMENT INVOLVING A TOTAL AMOUNT IN EXCESS OF FIVE HUNDRED THOUSAND PESOS
(PHP500,000.00) WITHIN ONE (1) BANKING DAY.

SUSPICIOUS TRANSACTIONS ARE TRANSACTIONS, REGARDLESS OF AMOUNT, WHERE ANY OF THE

FOLLOWING CIRCUMSTANCES EXISTS:
1. THERE IS NO UNDERLYING LEGAL OR TRADE OBLIGATION, PURPOSE OR ECONOMIC
JUSTIFICATION;
2. THE CLIENT IS NOT PROPERLY IDENTIFIED;
3. THE AMOUNT INVOLVED IS NOT COMMENSURATE WITH THE BUSINESS OR FINANCIAL CAPACITY
OF THE CLIENT;
4. TAKING INTO ACCOUNT ALL KNOWN CIRCUMSTANCES, IT MAY BE PERCEIVED THAT THE CLIENT'S
TRANSACTION IS STRUCTURED IN ORDER TO AVOID BEING THE SUBJECT OF REPORTING
REQUIREMENTS UNDER THE ACT;
5. ANY CIRCUMSTANCE RELATING TO THE TRANSACTION WHICH IS OBSERVED TO DEVIATE FROM
THE PROFILE OF THE CLIENT AND/OR THE CLIENT'S PAST TRANSACTIONS WITH THE COVERED
INSTITUTION;
6. THE TRANSACTION IS IN ANY WAY RELATED TO AN UNLAWFUL ACTIVITY OR ANY MONEY
LAUNDERING ACTIVITY OR OFFENSEUNDER THIS ACT THAT IS ABOUT TO BE, IS BEING OR HAS BEEN
COMMITTED; OR
7. ANY TRANSACTION THAT IS SIMILAR, ANALOGOUS OR IDENTICAL TO ANY OF THE FOREGOING.

Unlawful activity refers to any act or omission or series or combination thereof involving or having
relation, to the following:
a. Kidnapping for ransom
b. Activities under RA No. 9165 otherwise known as the Comprehensive Dangerous Drugs Act of
2002
c. Activities under RA No. 3019 otherwise known as the Anti-Graft and Corrupt Practices Act
d. Plunder
e. Robbery and extortion
f. Jueteng and masiao
g. Piracy on the high seas
h. Qualified theft
i. Swindling
j. Smuggling
k. Violation under RA No.8792 otherwise known as the Electronic Commerce Act
l. Hijacking, destructive arson and murder
m. Fraudulent practices and other violations under RA No. 8799 otherwise known as the Securities
Regulation Code
n. RA No. 10168 otherwise known as the Terrorism Financing Prevention and Suppression Act of
2012
o. Felonies and offenses of similar nature to the aforementioned unlawful activities that are
punishable under the penal laws of other countries

Investigation of Money Laundering Offenses

1. Suspicious transactions
2. Covered transactions deemed suspicious after an investigation conducted by the AMLC
3. Money laundering activities
4. Other violations of the AMLA

Covered institutions shall report to the AMLC all covered transactions and suspicious transactions
within 5 working days from occurrence thereof, unless the supervising authority concerned
prescribes a longer period not exceeding 10 days.

"Monetary Instrument" refers to:

(1) Coins or currency of legal tender of the Philippines, or of any other country;
(2) Drafts, checks and notes;
(3) Securities or negotiable instruments, bonds, commercial papers, deposit certificates, trust
certificates, custodial receipts or deposit substitute instruments, trading orders, transaction tickets
and confirmations of sale or investments and money market instruments;
(4) Contracts or policies of insurance, life or non-life, and contracts of suretyship; and
(5) Other similar instruments where title thereto passes to another by endorsement, assignment or
delivery.